Kennedy Asks For Information On Relationship Between Schools And Lenders

Letter

KENNEDY ASKS FOR INFORMATION ON RELATIONSHIP BETWEEN SCHOOLS AND LENDERS

Today, Senator Edward M. Kennedy sent the below letter to sixteen student loan lenders. It has come to the attention of Chairman Kennedy that several large private lenders offering federally-insured student loans may be providing inappropriate compensation, favors or benefits to schools or school administrators in exchange for preferential treatment, including placement on so-called "preferred lender" lists. Senator Kennedy issued the following statement:

"When students take out loans to pay for college, they should be assured that the relationship between their school and their lender is free of bias or conflict of interest. A number of disturbing lender tactics have been reported to us that raise serious questions about whether students' best interests are being served when lenders and schools establish relationships to offer student loans. These include lenders who have offered school administrators "educational conferences" at luxury hotels, free entertainment and tickets to sporting events, free staff and printing services, and e-mail services to students on behalf of the financial aid office. These practices are inappropriate, and they need to stop. My investigation aims to uncover the facts concerning such inappropriate arrangements."

March 21, 2007

Dear XX,

I am writing about information that has come to my attention which raises concerns about the conduct of private lenders involved in the federally-guaranteed student loan program. Specifically, I am concerned that several private lenders may have offered or provided questionable favors or benefits to institutions of higher education, or to administrators at those institutions, in exchange for preferential treatment.

In light of these events, I ask that you provide to my office information and documents concerning your company's financial dealings with institutions of higher education involved in the federal-guaranteed student loan program. Please see the attached Document Request for specifics. I ask that you coordinate the production of documents with Nicholas W. Bath, Counsel to the Committee, at (202) 224-6912.

Thank you for your consideration.

Sincerely,

Edward M. Kennedy
Chairman

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